Pro-Brexit economists urge UK's May against "EU-lite"

LONDON, July 13 (Reuters) - A small group of economists who campaigned for Britain to leave the European Union urged the country's next prime minister on Wednesday not to compromise on free trade and efforts to curb immigration when negotiating its new relationship with the bloc.

Incoming Conservative prime minister Theresa May faces the monumental task of untangling Britain from the EU after the shock "Leave" victory at a referendum on June 23. Most economists said voting out would harm Britain's economy.

Patrick Minford, a Cardiff University economics professor and co-chair of the "Economists for Brexit" group, said the result showed policymakers that voters wanted more control over the country's borders and fewer rules and regulations.

"When you look at policy there's kind of two possible outcomes here - there is worst case as we see it, 'EU-lite', and the best case is where we go to unilateral free trade," Minford said at a news conference.

"EU-lite" refers to Norway's relationship with the EU, granting it access to the single market in return for accepting freedom of movement of EU citizens, paying contributions to the EU budgets and applying single market rules and regulations without having a vote on them.

Unilateral free trade means other nations would have tariff-free access to Britain even though they would not have to reciprocate, said Minford, a former adviser to late prime minister Margaret Thatcher.

"The only actual option that seems to be available that would satisfy voters' demands is this unilateral free trade option," Minford said.

Britain's government, which campaigned for the country to stay in the EU, and major organisations such as the International Monetary Fund and the Organisation for Economic Co-operation and Development have warned that Brexit will leave Britain worse off than if it stayed in the EU.

A Reuters poll of economists in the wake of the vote found that the economy could fall into a recession in the coming year.

By contrast, Economists for Brexit predicts growth of 2.3 percent this year and 2.7 percent in each of 2017 and 2018. (Editing by William Schomberg and Alison Williams)